DoD Issues Final Rule to Accelerate Small Business Payments

DoD is adopting as final, without change, an interim rule amending the Defense Federal Acquisition Regulation Supplement to accelerate payments to all small business concerns. Effective Date: November 18, 2011. Reference Federal Register Volume 76, Number 223 (Friday, November 18, 2011).

DoD published an interim rule in the Federal Register at 76 FR 23505 on April 27, 2011, amending the Defense Federal Acquisition Regulation Supplement (DFARS) to provide accelerated payments for all small business concerns. The rule removes the term ''disadvantaged'' from the language at DFARS 232.903 and DFARS 232.906(a)(ii), thereby extending the accelerated payment policy uniformly to all small business concerns. In combination with the change to the regulations, DoD immediately began a phased implementation to update the entitlement and payment systems so that they could accommodate accelerated payments. During the initial phase, the Defense Finance and Accounting Service modified DoD's largest system, the Mechanization of Contract Administration Services (MOCAS) system. MOCAS processes approximately 57 percent of the dollars paid through DFAS. The upgrades to MOCAS were completed on June 1, 2011. Over the course of the next year, subsequent legacy entitlement and payment system upgrades are scheduled for completion and deployment. Two respondents submitted public comments. DoD reviewed the comments in the development of the final rule. A discussion of the comments is provided as follows.

Discussion and Analysis of the Public Comments

Comment: The first respondent commented that the rule would ensure their company had adequate cash flow to promptly pay its vendors.

Response: This positive endorsement of the rule is noted.

Comment: The second respondent stated that the wording of the rule is ambiguous. Rather than stating it is DoD policy to pay small business concerns ''* * * as soon as possible * * *'', the respondent recommended that the rule should specify the number of days for processing payments to small business.

Response: The authority for DoD's payment policy is the Office of Management and Budget's (OMB's) Prompt Payment Regulations at part 1315 of title 5 of the Code of Federal Regulations. The phrase ''* * * as quickly as possible * * *'' was taken verbatim from those regulations.